1. Applicability Criteria:-

As per Section 135(1) of Companies Act, 2013 CSR is applicable on every Company i.e. (Private, Public, Listed, Unlisted, Foreign, One person etc) having net worth of rupees Five hundred Crore or more, or turnover of rupees One Thousand Crore or more or a net profit of rupees Five Crore or more during any financial year shall constitute a Corporate Social Responsibility Committee.

For the purpose of this section “Any Financial year” implies any of the three preceding financial years.

2. Constitution:–

CSR Committee shall consist of three or more directors, out of which at least one director shall be an independent director. However in case of unlisted public Company or Private Company which is not required to appoint an independent director shall have its CSR Committee without such director, In case of Private Company with only two directors on its Board shall constitute its CSR Committee with two such director.

3. Function of CSR Committee:-

• Formulate and recommend to Board of Directors, CSR Policy which shall indicate the activities to be undertaken by the Company as per Schedule VII as defined in Annexure 1.
• Recommend the amount of expenditure to be incurred on the activities.
• Monitor CSR Policy of the Company.

4. Function of Board of Directors of Company:-

• The Board shall after taking into account the recommendations of CSR Committee, approve the CSR Policy for the Company and disclose contents in its Annual Report and also on the Company’s website.
• The Board shall ensure the activities included in CSR Policy are undertaken by the Company.
• The Board of a Company may decide to undertake CSR activities approved by the CSR Committee, through
• A Company established under section 8 of the Companies Act, 2013 or a registered trust or a registered or a registered society, established by the Company.
• A Company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government or any entity established under an Act of Parlianment or a State legislature:

Provided that if the Board of Company decided to undertake CSR activities through a section 8 Company or a registered trust or a registered society, such Company or trust or society shall have an established track record of three years in undertaking similar programs or projects.

5. Responsibility of Board of Directors of Company:-

The Board shall ensure that the Company spends, in every financial year, at least two percent of the average net profits of the Company made during three immediately preceding financial years, in accordance with CSR Policy.

Provided that the Company shall give preference to the local area and areas around it operates, for spending the amount earmarked for CSR activities.

Provided further that if the Company fails to spend such amount, the Board shall in its Annual Report, specify the reasons for not spending the amount.

For the purpose of this section “Average net profit” shall be calculated in accordance with the provisions of section 198 of Companies Act, 2013.

6. CSR Activities:-

• The CSR activities shall be undertaken by the Company, as per its stated CSR Policy, as projects or programs or activities, excluding activities undertaken in pursuance of its normal course of business.
• CSR activities undertaken in India only shall amount to CSR Expenditure.
• CSR projects or programs or activities that benefit only the employees of the Company and their families shall not be considered as CSR activities.
• Contribution of any amount directly or indirectly to any political party shall not be considered as CSR activity.

7. CSR Capacities & Expenditure:-

Companies may build CSR capacities of their own personal as well as those of their implementing agencies through institutions with established track records of at least three financial years but such expenditure including expenditure on administrative overheads shall not exceed five percent of total CSR expenditure of the Company in one financial year.

Annexure- 1

Schedule VII of Companies Act, 2013

List of following activities that falls under the Schedule VII are as follow:-

1. Eradicating extreme hunger and poverty.
2. Promotion of education.
3. Promoting gender equality and empowering women.
4. Reducing child mortality and improving maternal health.
5. Combating human immune deficiency virus, malaria and other diseases.
6. Ensuring Environmental Sustainability.
7. Employment enhancing vocational skills.
8. Social business projects.
9. Contribution to Prime Minister’s National Relief Fund or any other fund set up by the Central Government or State Government for socio-economic development of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women.
10. Contribution to the Clean Ganga Fund set up by Central Government for rejuvenation of river Ganga.
11. Protection of national heritage, art and culture including restoration of historical buildings, setting up public libraries, promotion and development of traditional arts and handicrafts.
12. Measures for the benefit of armed forces veterans, war widows and their dependents.
13. Training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports.
14. Contributions to technology incubators located within academic institutions which are approved by the Central Government.
15. Rural development projects.
16. Slum area development.